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The Brick-and-Mortar Business Evolution: Storefronts Now Act Like Startups

Whether it's a software company bootstrapping its way from a San Francisco studio or a shoe shop opening its doors somewhere on Main Street — technically speaking, every new business could be called a startup at the beginning.

But certain characteristics of certain startups — in the tech-sector, in particular — are different from shoe stores, bakeries and your typical boutique. Tech startups are known for growing via rounds of funding, as opposed to small business loans, for example, and the shoe store often enters the market as a joiner, while the tech company almost always looks for an opportunity to disrupt the market it enters.

This has long been the case, but it is a scenario that has been changing in recent years. Founders of new brick-and-mortar businesses are taking fresh approaches to their startup phase — and they're clearly borrowing from the playbook of their tech-based cousins. That's what the following companies are up to. And if the metrics they supply show something significant about their model, it's that each of these startup-style brick-and-mortar businesses are growing. It could be the mark of a business evolution.

When it comes to exhibiting classic tech-startup traits, Dig Inn has got it down. First, the business pivoted. In 2011, Adam Eskin, founder and CEO, transformed his initial iteration of a healthy-food enterprise from The Pump Energy Food, aimed at the fitness set, to Dig Inn, aimed at an upscale food-conscious customer. Now, from Hudson Valley mac-and-cheese to wild-salmon salad, Dig Inn is locally sourcing an organic menu of what Eskin refers to as "fine dining food, in a fast-food environment."

Furthermore, Eskin wants to see Dig Inn disrupt the very concept of farm-to-restaurant. If his vision plays out, the company will work directly with smaller, local farms — assisting them with up-front costs to start producing the vegetables and products with which Dig Inn cooks, and then buying from those farms a guaranteed amount of that material annually. "Ultimately, we think there's an opportunity to lease the land ourselves," Eskin said, regarding how far the plan could expand. In effect, Dig Inn want to prompt the creation of new farms and new farmers.

Like a tech startup, they've pulled in some $7 million through a pair of funding rounds, are projecting 70% growth this year and are ready to embark on a Series C that could fuel them into 2015. Dig Inn plans to soon open 20 new locations.

Foodies seem to be a common factor for brick-and-mortar owners iterating along tech-startup lines. In Sweetgreen's case, they actually pivoted after launch, in 2012, from a somewhat traditional restaurant model to a more startup-like structure. After a seed round of funding in the six-figure range, at the end of 2013 they won a new $22 million round from Steve Case's Revolution LLC.

Nicolas Jammet, co-founder, said the company is now emulating quicker-paced startups, using its funds to invest heavily in team-building, hiring on at numbers ahead of what they need. At 26 stores today, they're on-boarding to support 50 and current have a team of 882.

And, in a gentle way, Sweetgreen wants to disrupt. Its vision isn't only to put scratch-cooked sustainably sourced organic meals onto fast-casual tables, it's to build a lifestyle brand. To help broadcast that message, Sweetgreen throws the annual Sweetlife music festival. And while music outside, under sunny skies, is certainly a summertime ritual associated with living well, Sweetgreen takes the opportunity to cater to the audience from its menu. "I'm listening to my favorite band in this incredible venue," said Jammet, "and I'm eating food that's actually healthy for me. It's a simple idea, but it's an incredible thing."

What if you start out sans brick-and-mortar, but pivot to a strategy that disrupts by opening physical locations? That's the course Ministry of Supply took, starting in 2013. "Unlike many brands on a similar timeline to us — shifting from offline to online, thinking it's a way to reach more customers — we shifted from online to offline," said Daniel Weisman, director of marketing for the company, which was founded in 2010.

Ministry of Supply started selling its first high-tech fabric clothes in 2011, and entered a series of Kickstarter efforts in 2012 to open up further markets. And then, last year, it began creating pop-up brick-and-mortar sites where customers experience open-studio style sessions, try out different products and offer feedback. Hopefully, they buy some clothes as well.

"We want to give people a high-quality, first-hand experience," Weisman said. "We're really trying to take the attitude that tech startups have had for years, saying, 'Let's test, let's iterate' … We're not going to spend tons of money on, say, advertising … we'll test five or six different markets, see what works well for us and then decide if that's where we start to invest more heavily in the future."

If there's a bottom line to these stories, it's that brick-and-mortar is hardly confined to four walls and a counter. For Dig Inn, Sweetgreen and Ministry of Supply, it seems that approaching business with both focus and openness — a mix that characterizes startups of another kind, those in the tech sector — is working well.

If the model holds true, there's no telling how the strategy stands to change the next wave of new companies to come.

Mashable
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